Revenue have issued a review in regard to short term leasing from January 2020. Revenue have now defined that;
Income for providing short term accommodation for occasional visitors such as through an online accommodation booking system is not considered rental income (Case V) and is taxable as “other income” (Case IV) if occasional income or as “trading income” (Case I) if operated as a trade such as a guesthouse.
Therefore, in summary, Airbnb rentals and similar short-term rentals are no longer considered rental income and are to be declared as ‘other or trade income’.
What does this mean for my return?
Capital allowances (expenses subject to wear and tear) are not allowable against the profits of income under Case IV. However, expenses incurred to provide such accommodation are an allowable deduction such as ; commission fees, cleaning fees, reasonable cost of light and heat. Annual costs such as insurance, tv licence and general repairs and maintenance are no longer an allowable expense against profits under Case IV.
Now that this income is considered ‘other income’, You must register for VAT if your income is likely to exceed €37,500 per year. The VAT rate for short term accommodation is at a reduced rate of 9% and applies to;
- Letting of a room(s) in a hotel or guesthouse.
- Short term lettings of all or part of a house, apartment or similar building.
- Letting of a part of a caravan park or similar place.
- Letting of a part of a camping site or similar place.
- Provision of any other holiday accommodation.
However, the provision of student accommodation is exempt from VAT.
A VAT registered business providing taxable short-term accommodation may reclaim Value-Added Tax (VAT) incurred on their business costs under the normal VAT rules.
Should you have any queries on this issue, please contact us on 01 5397999 or request our application here